In last week’s article, The Myth of the Fearful, Entrenched Owner, we used selected results from The BEI 2016 Business Owner Survey Report to debunk the myth that owners are too entrenched or too scared to leave their businesses. In this article, we take on another myth: Owners don’t plan their exits because they are too busy.
The BEI 2016 Business Owner Survey asked owners what was preventing them from beginning to plan for a successful business exit. Surprisingly, only 22% responded, “I’m too busy.” On the other hand, most owners listed several reasons other than busyness for not planning. In fact, some owners chose several reasons for their failures to plan.
We think it’s important for advisors to anticipate certain objections from owners. Once advisors understand what owners are thinking, they are better equipped to respond to owners’ self-imposed barriers proactively. Thus, we’ve categorized the owners’ responses to the question of why they had not begun planning their exits below.
As you review the categories below, remember that owners could pick as many responses as they felt applied to their situation.
- Obstacles: I haven’t begun to plan because of internal or external obstacles.
- Timeliness: I will plan when I’m ready to exit.
- Value: I haven’t begun to plan because the business does not have enough value.
- Planning is for others: I have no need to plan, either because I’m never going to leave or can leave anytime.
- Lost: I don’t know what to do or where to start.
Owners whose responses fell into the Obstacles and Value categories are the owners who have the greatest need to plan. The Exit Planning Process is designed to help these owners grow value and avoid or overcome challenges by following a well-traveled planning road map and using top-notch advisors.
Owners’ Knowledge Gap
Many owners cite a lack of knowledge about the following as impediments to planning their exits:
- The planning process itself.
- The amount of time it takes to prepare a business for its owner’s exit.
- The need to increase the transferable value of the company by (a) developing and implementing growth strategies and (b) reducing the owner’s role—and time spent—in the business.
The Exit Planning Advisor’s Response
We suggest that you reach out to clients and prospects with a few simple questions to probe both their concerns and the extent of their knowledge. With that information, you can determine how you can help them address their concerns and increase their pool of knowledge.
We’ve found that asking open-ended questions about owners’ wishes and aspirations for themselves and their businesses is the gateway to engaging them in Exit Planning. The questions to ask are basic, but fundamental.
- First, explore your client’s time frame for exiting by asking, “Have you thought about leaving your business someday? What does that look like to you?”
- Then, ask about the amount of money owners think they need for post-exit financial security. “Is it important for you to maintain your current lifestyle after you’ve exited your business? What does financial security mean to you?”
- Don’t forget to ask whom they wish to transfer the business to. “Whom would you like your successor to be?”
- Wrap up the discussion by asking owners what’s stopping them from beginning to plan their exits today.
Based on their years of experience with thousands of owners, BEI Members often tell us that the underlying reason owners don’t begin creating and implementing a proper Exit Plan is because no one has asked them to do so. The BEI 2016 Business Owner Survey tends to support our Members’ experiences.
If you’ve hesitated to approach owners about planning their business exits because you anticipate that they’ll say they’re too busy, the survey results should be encouraging. While you might hear that objection occasionally, it’s a less common response than you’d think.
As you engage owners with your Exit Planning services, approach them under the assumption that they have some ideas about how they will leave their businesses, because most do.
In our next article, we will share owners’ responses about exactly whom they are talking to about their intentions to exit their businesses.
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